Yahoo to announce layoffs tomorrow

THIRD QUARTER EARNINGS aren’t the only thing expected from Internet firm Yahoo on Tuesday. The company will likely also announce the layoffs of some 1,000 workers, according to Silicon Valley newspapers.

San Jose Mercury News reported that the flailing firm would likely be laying off as many employees as it did back in January, when it fired 1,000 workers, including 328 in Sunnyvale and Santa Clara.

The WSJ, quoting unnamed sources said to be “familiar with the matter”, noted the layoffs would be accompanied by “significant cost-cutting plans”. The WSJ further claims several of the company’s managers have been told to find ways of cutting their operating budget by about 15 per cent.

Yahoo does admit to recently having hired consultants Bain & Co to help identify possible 'structural changes' at the firm. That's 'layoffs' to the rest of us.

Yahoo has approximately 14,300 employees and redundancies are expected to be global and company-wide. Meanwhile, Yahoo’s US recruitment has virtually come to a standstill and, according to WSJ sources, the firm also recently had to let go of two to three dozen external recruiters.

The economic crisis scapegoat will likely be given as the reason for Yahoo to suck in its breath and tighten its belt, but that might not be the only factor. Others blame the failed Yahvole deal as well as the meteoric rise of Facebook as contributing to the crash-and-burn of Yahoo stock prices in the past year. In the past three months alone, share value has plummeted 43 per cent to just $12.90.

So, what to do? Yahoo's board is said to still be mulling a merger with Time Warner's AOL. Also, the Microsoft deal may well rear its ugly head again, based on comments made by Volish CEO Steve Ballmer at a recent industry conference.

Ballmer raised the possibility that Yahoo and Microsoft could still pursue a search partnership during comments at an industry conference.

Yahoo had hoped that an Internet-search partnership with Google would help generate a few hundreds of millions of dollars in revenues, but a regulatory hold-up and trouble with the US DOJ seems to have thrown a spanner in the works.

Yahoo has been predicting between $1.78 billion and $1.98 billion of revenue for Q3 and between $7.35 billion and $7.85 billion for the year, but with ad revenues at an all time low, tomorrow’s financial announcement may not be so optimistic. µ

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San Jose Mercury News
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